LNG saves Indonesia amid high oil price

Indonesia did not gain profit from the soaring oil price, as it had to spend all its oil revenue to import oil and fuel. But, windfall profit came from the liquefied natural gas (LNG), a senior official at the ministry of energy and mineral resources said.

Staff expert to Minister of Energy and Mineral Resources Iin Arifin Takhyan said Indonesia currently exports 591,000 barrels of oil per day, but only 135,000 bpd of which belonged to the government with the rest owned by the contractors of state oil and gas company Pertamina.

Aside from it, Indonesia exports 4,400 bpd of oil-based fuel products and 56,400 bpd of non-fuel products owned by Pertamina.

However, Indonesia currently imports 224,000 bpd of oil and 18,000 bpd of high octane mogas components for Pertamina's refineries, he said.

Besides, Indonesia also imports 173,000 bpd of oil-based fuel products and 4,000 bpd of non-fuel products.

The revenue from oil, fuel and non-fuel products was lower than the expenditure for oil, fuel and non-fuel import, Iin said.

"We gain windfall profits from the sale of LNG. As far as oil is concerned, our export revenue is still lower than import expenditure," Iin was quoted by Republika daily as saying.

Iin said Indonesia now exports 27 tons of LNG per year at the price referred to the US consumer index.

Indonesia's LNG pricing system, which has become the reference for many other LNG producing countries, allows Indonesia to sell its LNG higher than the market price for oil.

The price of Indonesia's LNG increased along with the increase in oil price, he said.

Iin said under the state budget, Indonesia projected oil and gas revenue of Rp. 42 trillion (US$ = Rp.8, 800) for the fiscal year April-December 2000, based on the assumption that oil price reached US$ 20 per barrel and the rupiah value was at Rp 7,000 per dollar.

Fuel subsidy is projected at Rp 22 trillion, leaving an oil and gas net profit of Rp 20 trillion, under the state budget.

Now, with the oil price averaging $28 per barrel and the Indonesian currency at an average Rp 8,200 per dollar, Indonesia expected to receive Rp. 75 trillion in oil and gas revenue throughout the April-December 2000 fiscal year, Iin said.

But, fuel subsidy was estimated to soar to Rp. 31 trillion throughout the fiscal year due to the high oil price, Iin said.

Indonesia would thus gain Rp 31 trillion in oil and gas profit throughout the current fiscal year thanks to the soaring oil price, or Rp 11 trillion higher than the state budget's estimated figure, Iin said.

The windfall profits mostly came from the sale of LNG, Iin said. (*)